BA computer chaos threatens the world’s favorite airline

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bimjim
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BA computer chaos threatens the world’s favorite airline

Unread post by bimjim » Tue May 30, 2017

http://www.cnbc.com/2017/05/30/ba-compu ... rline.html

BA computer chaos threatens the brand of the world’s favorite airline
  • BA compensation bill could top £100 million
Willem Marx
Monday, 29 May 2017

British Airways enjoyed record operating profits in 2016, thanks to increased passenger numbers, low fuel prices and the post-Brexit referendum collapse of sterling. But from a cost perspective, the airline's greatest single line item - apart from aviation fuel - remained its staff, accounting for roughly a quarter of total operating expenditures.

Nobody should be surprised then that the company sought to improve its margins by reducing headcount or - as the airline euphemistically describes it - embarking on "a series of transformation proposals to develop a more efficient and cost effective structure."

But as the chaos of the last few days has shown, BA's decision to spend £124 million on severance packages for hundreds of staff last year seems not - at least in the short term - to have been money well spent. An ever increasing number of the firm's IT systems have been subcontracted out to third party companies, many of them overseas. And that move has prompted the airline employees' unions, the GMB, to blame this weekend's computer outage and subsequent PR debacle on BA's decision to ax and outsource British IT jobs over the past 12 months.

BA has previously admitted that the failure of a critical computer system could result in lost revenue, since it depends so heavily on its IT systems for so many of its business processes. But mitigation factors like disaster recovery and continuity arrangements seemed to fall woefully short following Saturday's computer outage. And this is not the first time in recent months that IT systems have failed at the airline. In September last year "patchy" check-in systems at Heathrow and Gatwick caused significant flight delays and forced travelers on several continents to queue for hours at a time.

There are of course several reasons that passengers choose a particular airline to get them from A to B, chief among them price, safety and customer service. But reliability is a major factor too, which is why British Airways was more than happy last year to highlight as an achievements that it managed more on-time departures from London airports than its major competitors easyJet and Ryanair.

But the self-proclaimed world's favorite airline has lost a lot of fans and goodwill - in the UK and beyond - over the past few days. Airline passengers understandably want a commitment from their carrier that they will arrive at their destination on time, with all their belongings, and without major inconvenience. That's why a premium brand like British Airways fears the fallout from major screw ups like Saturday's computer outage not only for the short-term financial ramifications, but also for the long-term damage it can have on perceived reliability.

Chief Executive Alex Cruz replaced Keith Williams just over a year ago, and soon after he introduced a five-year plan for the company that he claimed would lower the legacy airline's cost base but improve customer experience and invest in technology to make flight schedules more "resilient."

British Airways sets a lot of store by its brand reputation, and by its own admission, any erosion of that brand could "ultimately affect future revenue and profitability." Shares in parent company IAG opened lower in Madrid on Monday, despite attempts by Cruz to mollify disgruntled passengers with an online video message and after the airline's insistence that flight schedules would return to normal within days. IAG's chief financial officer must have been counting his lucky stars for the Bank Holiday, since it spared BA's U.K. stock an almost certain pummeling in London trading.

But there's no doubt investors will be watching the stock today for any turbulence that might indicate clouds on the horizon. BA introduced a new motto in 2011: "To Fly, To Serve." Most of its aircraft may now be back in the air, but this latest mishap has served neither its customers nor its shareholders particularly well.

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Re: BA computer chaos threatens the world’s favorite airline

Unread post by bimjim » Tue May 30, 2017

WELL DONE, Willie, lad!! You ALMOST shut it down this time - grand old revenge on Unite, eh? EH?!?! Better luck next time, what? Great excuse, that, "saving money"!!! Your Board must have swallowed that one hook, line and sinker!! Heh heh heh!!!

Just imagine, with BA gone you could start up a brand new British airline how you always wanted - just like RyanAir - and chuck all those lazy layabouts down to minimum wage - or less, if you can move their Headv Office and domiciles to some cooperative European country!

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Re: BA computer chaos threatens the world’s favorite airline

Unread post by bimjim » Wed May 31, 2017

http://www.travolution.com/articles/102 ... t-meltdown

British Airways shares plummet in fallout from IT meltdown
Ben Ireland
May 31st, 2017

British Airways boss Alex Cruz has been given the backing of IAG chief Willie Walsh as the airline continues to recover from an IT meltdown that left 75,000 passengers stranded over the bank holiday.

The reason for the chaos, which grounded all flights from Heathrow and Gatwick airports on Saturday, has been put down to a power shortage although some experts have questioned the explanation.

A cyber attack has been ruled out but BA faces reputational damage in the fallout after passengers slammed their handling of the situation as thousands of passengers missed flights and were left without their luggage.

Early trading on Monday saw £500 million wiped off the value of BA but it recovered to be worth £170 million less than before the weekend.

An £8 GDS booking fee for travel agents was quietly announced on the sunny Friday before the bank holiday, but the media storm surrounding the weekend’s event were worse that any hit the new surcharge could have made.

The compensation bill alone is expected to cost in the region of £100 million and some industry commentators say the knock-on effect on brand loyalty and reputation could be much worse.

John Strickland, director of independent transport consultancy JLS Consulting, said it was likely that BA would face a “significant financial impact” as its problems continue this week.

Willie Walsh, chief executive of parent company International Airlines Group (IAG) is yet to comment publically but a spokesman for the group said: “Alex has Willie’s absolute support. As far as Willie is concerned, this has nothing to do with the decisions Alex has made.”

The Telegraph said insiders at the airline told it that the power outage took place at a data centre on the outskirts of Heathrow and that in the recovery process an “uncontrollable” surge caused “catastrophic physical damage” to the system – but BA insists no data has been compromised.

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Re: BA computer chaos threatens the world’s favorite airline

Unread post by bimjim » Wed May 31, 2017

Of course Wee Willie backs Cruz... Cruz is not the problem.

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